America's Car-Mart Reports Third Quarter Earnings
Company Announces 3 for 2 Stock Split
BENTONVILLE, Ark., March 9 -- America's Car-Mart, Inc. today announced its operating results for the third fiscal quarter and nine months ended January 31, 2005. The Company's results are segmented into continuing and discontinued operations.
Highlights of third quarter operating results (continuing operations): * Revenue growth of 15% compared to the prior year quarter * Income growth of 54% compared to the prior year quarter * Diluted EPS growth of 54% compared to the prior year quarter * Retail unit sales growth of 1% compared to the prior year quarter
For the three months ended January 31, 2005, revenues increased 15% to $48.2 million, compared with $41.9 million in the same period of the prior fiscal year. Income for the quarter increased 54% to $4.3 million, or $0.54 per diluted share, versus $2.8 million, or $0.35 per diluted share, in the same period last year. Retail unit sales increased 1% to 6,019 vehicles in the current quarter, compared to 5,936 vehicles in the same period last year.
Highlights of nine month operating results (continuing operations): * Revenue growth of 16% over the prior year period * Income growth of 24% over the prior year period * Diluted EPS growth of 23% over the prior year period * Retail unit sales growth of 4% over the prior year period
For the nine months ended January 31, 2005, revenues from continuing operations increased 16% to $149.5 million, compared with $128.5 million in the same period of the prior fiscal year. Income from continuing operations for the first nine months of FY2005 increased 24% to $13.7 million, or $1.70 per diluted share, versus $11.0 million, or $1.38 per diluted share, in the same period last year. Retail unit sales increased 4% to 18,761 vehicles in the current period, compared to 18,098 vehicles in the same period last year.
"We are pleased with our strong financial results in the third quarter, including revenue growth of 15% and income growth of 54% over the same period last year," commented T. J. ("Skip") Falgout, III, Chief Executive Officer of America's Car-Mart. "Our improvement in the credit loss area is largely attributable to our decision to sell a higher average retail sales price vehicle, as well as increased training for our collection staff and tightening of our delinquency standards. Our gross margin percentage of 47.4% has improved from 45.8% in the second quarter of fiscal 2005."
"In light of our strong financial performance in the third quarter and the Company's prospects in the future, the Board of Directors has declared a three-for-two stock split for shareholders of record on March 25, 2005, payable on April 14, 2005. We believe the stock split will broaden the Company's shareholder base and increase the number of shares available for trading," stated Mr. Falgout.
"We are, however, lowering our guidance for the fourth quarter by $.04 per share," added Mr. Falgout, "in view of the internal control compliance costs we expect to incur in that quarter related to Section 404 of the Sarbanes- Oxley Act. These costs should drop after the initial implementation of Section 404, but the initial costs will be significant, and we want to be prudent in properly allowing for these anticipated expenditures."
"During the fourth quarter, we will begin rolling out our new advertising campaign centered around the theme, 'DRIVE-EASY'", said William H. ("Hank") Henderson, President of America's Car-Mart. "The thrust of the campaign is that we make the purchase of a vehicle from Car-Mart a very convenient, 'no hassle', experience. The level of production of the television spots will represent a much higher quality of advertising than we have had in the past. We are confident this campaign will receive much attention and will prove to be very effective in driving new customers to our Car-Mart dealerships."
Fiscal 2005 Earnings Guidance
The Company has updated its fiscal year 2005 earnings estimate from continuing operations to take into account the actual results from the third quarter and expectations for the fourth quarter. The Company has reduced its earlier guidance of $.63 to $.66 per diluted share in the fourth fiscal quarter ending April 30, 2005 by $.04 per share principally as a result of expected Sarbanes-Oxley related compliance costs. Accordingly, the Company projects that it will earn $2.29 to $2.32 per diluted share from continuing operations in FY 2005 as follows:
Projected
Period Period Ending Diluted EPS
1st Quarter 7-31-04 $.62 Actual
2nd Quarter 10-31-04 .55 Actual
3rd Quarter 1-31-05 .54 Actual
4th Quarter 4-30-05 .59 to .62 Projected
Fiscal 2005 4-30-05 $2.29 to 2.32 Projected
Stock Split
The Board of Directors declared a three-for-two stock split in the form of a 50% stock dividend. Shareholders will receive one additional share of America's Car-Mart common stock for every two shares held on the record date. The new shares will be distributed on April 14, 2005 for shareholders of record at the close of business on March 25, 2005. As a result of the split, the total number of shares of common stock outstanding will increase from approximately 7.9 million to approximately 11.8 million.
About America's Car-Mart
America's Car-Mart operates 76 automotive dealerships in seven states and is the largest publicly held automotive retailer in the United States focused exclusively on the "Buy Here/Pay Here" segment of the used car market. The Company operates its dealerships primarily in small cities throughout the South-Central United States selling quality used vehicles and providing financing for substantially all of its customers. For more information on America's Car-Mart, please visit our website at http://www.car-mart.com/ .
America's Car-Mart, Inc.
Consolidated Results of Operations
(Operating Statement Dollars in Thousands)
As a %
% of Sales
Three Months Change Three Months
Ended 2005 Ended
January 31, vs. January 31,
2005 2004 2004 2005 2004
Operating Data:
Retail units sold 6,019 5,936 1.4%
Average number of stores
in operation 76.0 67.3 12.9
Average retail units sold
per store per month 26.4 29.4 (10.2)
Average retail sales price $7,082 $6,300 12.4
Same store revenue growth 10.8% 5.9%
Period End Data:
Stores open 76 68 11.8%
Accounts over 30 days
past due 4.6% 4.5%
Operating Statement:
Revenues:
Sales $44,177 $38,643 14.3% 100.0% 100.0%
Interest income 4,042 3,210 25.9 9.1 8.3
Total 48,219 41,853 15.2 109.1 108.3
Costs and expenses:
Cost of sales 23,258 19,882 17.0 52.6 51.5
Selling, general and
administrative 8,689 7,387 17.6 19.7 19.1
Provision for credit losses 8,947 9,765 (8.4) 20.3 25.3
Interest expense 345 295 16.9 0.8 0.8
Depreciation and amortization 116 71 63.4 0.3 0.2
Total 41,355 37,400 10.6 93.6 96.8
Income from continuing
operations before taxes 6,864 4,453 54.1 15.5 11.5
Provision for income taxes 2,530 1,643 54.0 5.7 4.3
Income from continuing
operations 4,334 2,810 54.2 9.8 7.3
Discontinued operations:
Income from discontinued
operations, after taxes
Net income $4,334 $2,810 54.2%
Basic earnings per share:
Continuing operations $0.55 $0.37 50.3%
Discontinued operations --- ---
Total $0.55 $0.37
Diluted earnings per share:
Continuing operations $0.54 $0.35 53.6%
Discontinued operations --- ---
Total $0.54 $0.35
Weighted average number
of shares outstanding:
Basic 7,834,036 7,634,222
Diluted 8,027,165 7,994,430
America's Car-Mart, Inc.
Consolidated Results of Operations
(Operating Statement Dollars in Thousands)
% Change As a % of Sales
Nine Months Ended 2005 Nine Months Ended
January 31, vs. January 31,
2005 2004 2004 2005 2004
Operating Data:
Retail units sold 18,761 18,098 3.7%
Average number of
stores in
operation 74.0 66.2 11.8
Average retail
units sold per
store per month 28.2 30.4 (7.3)
Average retail
sales price $7,079 $6,363 11.3
Same store revenue
growth 11.4% 10.8%
Period End Data:
Stores open 76 68 11.8%
Accounts over 30
days past due 4.6% 4.5%
Operating Statement:
Revenues:
Sales $138,104 $119,160 15.9% 100.0% 100.0%
Interest income 11,440 9,318 22.8 8.3 7.8
Total 149,544 128,478 16.4 108.3 107.8
Costs and expenses:
Cost of sales 73,825 62,014 19.0 53.5 52.0
Selling, general
and
administrative 25,255 21,823 15.7 18.3 18.3
Provision for
credit losses 27,656 26,047 6.2 20.0 21.9
Interest expense 859 915 (6.1) 0.6 0.8
Depreciation and
amortization 307 231 32.9 0.2 0.2
Total 127,902 111,030 15.2 92.6 93.2
Income from
continuing
operations
before taxes 21,642 17,448 24.0 15.7 14.6
Provision for
income taxes 7,984 6,444 23.9 5.8 5.4
Income from
continuing
operations 13,658 11,004 24.1 9.9 9.2
Discontinued
operations:
Income from
discontinued
operations,
after
taxes 165
Net income $13,658 $11,169 22.3%
Basic earnings per
share:
Continuing
operations $1.75 $1.47 18.9%
Discontinued
operations --- 0.02
Total $1.75 $1.49
Diluted earnings per
share:
Continuing
operations $1.70 $1.38 23.2%
Discontinued
operations --- 0.02
Total $1.70 $1.40
Weighted average
number of shares
outstanding:
Basic 7,806,632 7,480,518
Diluted 8,013,661 7,951,513
America's Car-Mart, Inc.
Consolidated Balance Sheet and Other Data
January 31, April 30,
2005 2004
Cash and cash equivalents $1,101,503 $1,128,349
Finance receivables, net $118,973,541 $103,683,660
Total assets $137,464,966 $117,241,451
Revolving credit facility $27,711,051 $22,534,120
Stockholders' equity $98,868,038 $84,577,476
Shares outstanding 7,848,061 7,757,841
Finance receivables:
Principal balance $147,244,482 $128,719,627
Allowance for credit losses (28,270,941) (25,035,967)
Finance receivables, net $118,973,541 $103,683,660
Allowance as % of principal balance 19.20% 19.45%
Changes in allowance for credit
losses:
Nine Months Ended
January 31,
2005 2004
Balance at beginning of year $25,035,967 $20,395,095
Provision for credit losses 27,655,675 26,046,851
Net charge-offs (24,420,701) (22,382,329)
Balance at end of period $28,270,941 $24,059,617